A topic related to catastrophic injury claims, but not limited to them, is the topic of Medicare Set-Aside Allocations or trusts ("MSA's"). This is a complicated area, and has been an important issue in Workers' Compensation for some years. An MSA may be necessary anytime a settlement is reached in a Workers' Compensation claim where the Employee/Claimant is currently a Medicare beneficiary. Even if the Employee/Claimant is not currently a Medicare beneficiary, an MSA could still be advisable if there is a reasonable expectation that the Employee/Claimant is going to become a Medicare beneficiary in the relatively near future, especially if the settlement is a large one.
Succinctly put, Medicare does not wish to allow injured workers who are receiving Medicare benefits, or who will be soon, to settle their Workers' Compensation claims, and then pass along to Medicare the costs associated with ongoing treatment for their work injuries. The Medicare Secondary Payer Act was enacted to ensure that Medicare would remain a secondary payer for medical expenses in Workers' Compensation claims, as well as other types of claims. All parties to a Workers' Compensation claim must keep Medicare's interests in mind when resolving the claim and looking at future Medicare covered medical benefits.
Generally, Medicare will not cover an Employee/Claimant's future injury related medical expenses until the amount of the settlement reasonably allocated for future Medicare covered medical treatment is exhausted. Accordingly, MSA's are a good way of ensuring that Medicare's interests are considered, insofar as money is set aside from the settlement to pay for the Employee/Claimant's future medical care for the work-related injury, once the settlement has been finalized and the Employer/Insurer is no longer paying for that medical care. This ensures that Medicare will remain the secondary payer once the Workers' Compensation claim is settled.
In 2001, the Centers for Medicare and Medicaid Services ("CMS") prescribed regulations for reviewing MSA allocations for Workers' Compensation claims. Per CMS, an MSA may be submitted to CMS for review in the following situations:
- The claimant is currently a Medicare beneficiary and the total settlement amount is greater than $25,000; or
- The claimant has a "reasonable expectation" of Medicare enrollment within 30 months of the settlement date and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.
Note that CMS does not review MSA proposals for Medicare beneficiaries where the total settlement amount is $25,000 or less. However, this does not mean that an MSA is not required in such lower dollar settlements for Medicare beneficiaries. Even though CMS will not review an MSA in such scenarios, Medicare beneficiaries must still consider Medicare's interests in all Workers' Compensation cases, and must ensure that Medicare is a secondary payor to the Employer/Insurer in such cases. An MSA could well be a good idea in such cases to ensure that the parties are protecting Medicare's interests.
In short, MSA's must be considered when resolving all Workers' Compensation claims where a client is a Medicare beneficiary, or is likely to be in the reasonably near future. There are many commercial vendors that provide professional services related to MSA's, including making the calculations for recommended MSA allocations. The Employer/Insurer will usually pay for these services, as it is in their interests, as well, to make sure that MSA's are created when necessary or advisable. Contact our firm today if you or a loved one has sustained catastrophic injuries or you would like to learn more about trust MSA's.